A new topic under discussion at the Administrative Council for Tax Appeals (Carf) has the potential to triple the PIS and Cofins bills to be paid by technology companies. The debate revolves around which tax regime should be adopted when these companies have a licensing and assignment agreement for the use of software developed abroad.<\/p>\n\n\n\n
In an initial analysis, the advisors agreed with the understanding of the Federal Revenue Service: the non-cumulative regime, which has a rate of 9.25%, is valid. With this, they ruled out the application of the cumulative regime, in which 3.65% is paid.<\/p>\n\n\n\n
This decision was handed down by the 1st Panel of the 2nd Chamber of the 3rd Section of Carf, at the end of last year, and the ruling was published a few days ago (case no. 13864.720156\/2016-58). Five of the eight counselors that make up the panel considered that, in these cases, there is software import. For this reason, the non-cumulative regime would be valid.<\/p>\n\n\n\n
\u201cIf this understanding prevails, we will have a serious sectoral problem,\u201d says lawyer Gisele Bossa, from the Demarest law firm, which works for the company involved in the case \u2013 SoftwareOne.<\/p>\n\n\n\n
Carf analyzed a contract between the company and Microsoft for the distribution of software licenses to Brazilian consumers. Customers purchased an access key and downloaded it directly from the Microsoft platform.<\/p>\n\n\n\n
The fine analyzed by the counselors is old \u2013 it covers the period from January to December 2012. Today, there is cloud technology and other software models that were not analyzed by Carf. For lawyers, however, the concept of \u201cimported software\u201d can be used for any of the situations.<\/p>\n\n\n\n
According to SoftwareOne lawyer Gisele Bossa, most companies in the sector collect 3.65% in PIS and Cofins.<\/p>\n\n\n\n
The discussion, in the council, took place around Law No. 10,833, of 2003. It is stated in article 10, item 25, that the revenues earned by IT service companies, resulting from software development activities and their licensing or assignment of usage rights are subject to the cumulative regime \u2013 which has a lower rate.<\/p>\n\n\n\n
It turns out that paragraph 2 establishes that \u201cthe provisions of item 25 do not cover the commercialization, licensing or transfer of the right to use imported software\u201d. The crux of the discussion is that in the cases of downloads and other technologies there is no physical product \u2013 which circulates between countries and would characterize an actual import.<\/p>\n\n\n\n
\u201cWhat exists between SoftwareOne and Microsoft, for example, is a distribution contract,\u201d says Gisele. \u201cThere is no nationalization of the software. It has nothing to do with technology transfer,\u201d argues the lawyer in an attempt to dispel the concept of import.<\/p>\n\n\n\n
The rapporteur for the case, counselor La\u00e9rcio Cruz Uliana Junior, who represents the taxpayers in the panel, agreed with the company. In his vote, he said that tax legislation links imports to the entry of a physical good into the country. This does not happen with downloads and streaming, for example.<\/p>\n\n\n\n
\u201cWhen the legislation requires that any fact that occurred abroad be taxed, it does not use the expression 'import', but rather, something that results in acquisition abroad, in accordance with [paragraph] 2 of article 4 'acquired from a natural or legal person resident or domiciled abroad', it says in the vote.<\/p>\n\n\n\n
He also cited a ruling by the Federal Supreme Court (STF) last year, in which the ministers debated the taxation of software \u2013 whether ICMS or ISS is applicable \u2013 and decided against the state tax because they considered that it is not included in the concept of merchandise.<\/p>\n\n\n\n
At Carf, however, the vote of counselor Arnaldo Diefenthaeler Dornelles, who represents the Treasury in the panel, prevailed. \u201cI understand that when paragraph 2 of article 10 of Law No. 10,833 of 2003 mentioned 'imported software', it did so to refer to software developed outside the country and 'brought' here by any means\u201d, he states in his vote. He was accompanied by four other judges.<\/p>\n\n\n\n
Marco Aur\u00e9lio Ver\u00edssimo, a specialist in the field and partner at Keppler Advogados, sees the Carf decision as a \u201cvery dangerous precedent with the potential to be catastrophic for companies in the sector\u201d. \u201cIt has broadened the concept of software import. It is likely to result in the issuance of several infraction notices\u201d, he says.<\/p>\n\n\n\n
Experts also consider the indirect financial impact of this position by Carf on companies in general. If it prevails, highlights Manuel Eduardo Borges, partner at the law firm Peluso, Stupp e Guarit\u00e1 Advogados, it will make \u201caccess to foreign technology and software much more expensive for Brazilian companies\u201d. For him, the IRS is confusing the transfer or license of a program developed abroad with import.<\/p>\n\n\n\n
The Office of the Attorney General of the National Treasury (PGFN) states, in a note, that for those who perform \u201csoftware development activities and its licensing or assignment of the right to use, as well as analysis, programming, installation, configuration, advisory, consulting, technical support and maintenance or updating of software\u201d, the cumulative regime applies. However, if there is \u201ccommercialization, licensing or assignment of the right to use imported software\u201d, the non-cumulative regime applies.<\/p>\n\n\n\n
The PGFN considers, however, that this is a new topic within the scope of Carf. For this reason, \u201cit is necessary to wait for new cases on the subject to assess how the case law will be established and to which situations the provisions of paragraph 2 of article 10 of Law 10.833, of 2003, apply\u201d.<\/p>\n\n\n\n